America Movil SAB, owned by Mexican billionaire and Latin American telecommunication czar Carlos Slim, will launch a 7.2 billion euro bid ($9.6 billion) to buy the 70 percent of the Dutch telecom company Royal KPN NV it doesn't already own.
The bid is a challenge to a rival offer for KPN's prized German mobile group E-Plus.
The offer price is miles above the 1.60 euros KPN's shares were trading at in mid-July before Movil's arch-rival, Telefonica SA, announced plans to buy E-Plus from KPN for around 8.1 billion euros.
The Telefonica deal was backed by KPN's management, but most analysts believe Slim wanted E-Plus for himself. E-Plus has a 15 percent stake in the German market that would be near-impossible to build from scratch.
Movil's 2.40 euros per share bid for KPN announced Friday offers a 20 percent premium on Thursday's closing price, valuing the company's stock at around 10.3 billion euros, and the 70 percent it doesn't already own at 7.2 billion euros.
The news of the approach sent KPN shares 17 percent higher, to 2.34 euros in Amsterdam.
Movil said it initially invested in KPN two years ago to improve its geographical diversity. Now it wants a controlling stake "to facilitate greater operational cooperation and co-ordination between the two companies."
KPN spokesman Ward Snijders said Friday the company is "studying" the America Movil bid.
The Telefonica deal for E-Plus must still be approved by KPN shareholders — including Movil — and it is expected to receive scrutiny from European regulators as it would combine Germany's third and fourth largest mobile providers.
Analyst Marc Hesselink of ABN Amro said there appear to be few hurdles to the Movil bid succeeding.
"In our view, American Movil was 'forced' to this bid by the E-Plus deal," he said in a research note.
Once Movil controls KPN, Slim could either demand a higher price for E-Plus, or more likely, block the sale entirely.
"Without E-Plus, there is limited strategic value in KPN," he said.
He concluded there was little chance Telefonica would try a counteroffer for KPN, given Movil's 30 percent stake, and little chance that Dutch governance rules would let KPN's boards torpedo a relatively attractive offer.
Based on reporting by the Associated Press.